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Bank Climate Disclosures: What Banks Report and How

November 2, 2026
Bank Climate Disclosures: What Banks Report and How

Bank climate disclosures are the published statements in which a bank explains how climate change affects its business and how its lending, investing and operations affect the climate. The core content is governance, strategy, risk management, and metrics and targets, including financed emissions. The most widely used global baseline is IFRS S2, which builds on the TCFD recommendations. Requirements differ sharply by country, and in the United States federal supervisors have stepped back from climate-specific guidance.

This guide covers what a bank discloses, which frameworks apply, where the data problems sit and how a bank can make its disclosures credible enough for supervisors, investors and assurance providers to rely on.

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TL;DR

  • Climate disclosures show how a bank is exposed to climate risk and how its activities affect the climate. The ECB explains that they help investors, central banks and supervisors judge financial stability.
  • IFRS S2 is the global reference: governance, strategy, risk management, and metrics and targets, including Scope 1, 2 and 3 emissions.
  • Rules vary by jurisdiction. Of 24 jurisdictions surveyed by the FSB, 19 had regulations, guidelines or roadmaps for climate disclosures as of 2024.
  • The hardest part for banks is data: financed emissions rely on proxies and estimates, so data quality scoring and assurance matter.
  • Credible disclosure needs governance, reconciliation with financial data, internal audit review and, increasingly, third-party verification.

Table of Contents

What bank climate disclosures are and why they matter

A climate disclosure is a document in which an institution sets out the carbon footprint of its activities and its exposure to climate risks. According to the ECB's explainer on climate disclosures, these documents show how a business affects and is affected by climate change. They give investors, central banks and supervisors the transparent information they need to make better-informed decisions, assess financial stability and manage the transition to a greener economy.

For a bank the stakes are different from those of a manufacturer. A bank's own operations produce relatively few emissions. The larger exposure sits in the loan book, the investment portfolio and the underwriting business. Emissions financed through those activities, and the physical and transition risks facing borrowers, are what readers of a bank's report want to understand.

Three groups use these disclosures:

  • Investors and counterparties, who compare banks and price risk.
  • Supervisors and central banks, who assess whether risks are identified, measured and managed.
  • Clients and civil society, who want to know how a bank's lending aligns with its stated targets.

What banks disclose: the four pillars

Most bank climate reports follow the structure introduced by the TCFD and now carried into the ISSB standards. Entities applying IFRS S2 are required to disclose on governance, strategy, risk management, and metrics and targets.

Governance

This pillar explains who oversees climate-related risks and opportunities. IFRS S2 asks for the governance processes, controls and procedures used to oversee them, including the specific bodies or individuals responsible. In a bank this usually means the board or a board risk committee, the chief risk officer, and the way climate topics are tied into management responsibilities.

Strategy

Strategy disclosures describe the climate-related risks and opportunities a bank expects over the short, medium and long term, and how they affect its business model, lending mix and transition plan. Banks typically describe sector exposures, such as energy, real estate and agriculture, and the scenarios used to test resilience.

Risk management

This section shows how climate risk is identified, assessed, prioritized and monitored, and how that process connects to the enterprise risk framework. A bank that treats climate as a separate side project will find this section hard to write. One that treats it as a driver of credit, market, operational and liquidity risk can explain it plainly. Our guide to a five-step ERM approach to climate risk, mapped to IFRS S2, NGFS and TCFD walks through that integration.

Metrics and targets

IFRS S2 requires Scope 1, 2 and 3 greenhouse gas emissions, plus progress against targets the entity has set or must meet by law or regulation. For a bank, Scope 3 category 15, financed emissions, is usually the largest number and the hardest to produce.

The Basel Committee on Banking Supervision adds a useful point of view. In its framework for voluntary disclosure of climate-related financial risks, it stresses that no single metric captures climate risk perfectly. Banks should therefore combine quantitative metrics with qualitative information to give a holistic picture of exposure.

The standards behind bank climate disclosures

The landscape looks crowded, but the main frameworks relate to one another in a fairly clear way.

FrameworkRole in bank disclosureRelationship to others
TCFD recommendationsFour-pillar structure that most banks adopted firstFolded into the ISSB standards
IFRS S1 and S2 (ISSB)Global baseline for sustainability and climate disclosuresBuilds on TCFD; adopted or referenced by many jurisdictions
Basel Committee frameworkSupervisory framework for voluntary disclosure of climate-related financial risksDesigned for internationally active banks
Local rules and guidanceMandatory or voluntary requirements set by national supervisorsOften based on ISSB and TCFD

The FSB notes in its 2024 progress report that the IFRS Sustainability Disclosure Standards provide a global framework and build on the TCFD recommendations. Jurisdictions have set or proposed requirements based on ISSB Standards and TCFD recommendations. If your bank already reports under TCFD, the move to IFRS S2 is an evolution, not a restart. We explain the differences in TCFD vs IFRS S2: what changed and what to do now and in our overview of the shift from TCFD to ISSB.

A date worth noting: the amendments to greenhouse gas emissions disclosures in IFRS S2, issued in December 2025, are effective for annual reporting periods beginning on or after January 1, 2027, with earlier application permitted. Teams building the 2026 reporting cycle should plan for them now. For a finance-leader view of the standard, see what CFOs must know about IFRS S2.

Mandatory or voluntary? It depends on the jurisdiction

There is no single global rule. The FSB's 2024 progress report found that, as of November 2024, 19 of 24 surveyed member jurisdictions had established regulations, guidelines or strategic roadmaps for climate-related disclosures. Seventeen had set or proposed voluntary or mandatory requirements based on ISSB Standards and TCFD recommendations. The same report also notes that several jurisdictions have taken concrete steps toward assurance requirements, to make disclosures more reliable and decision-useful.

Mandatory or voluntary? It depends on the jurisdiction

The FSB has also called for more work on the challenges of using ISSB Standards for SMEs and for companies in emerging market and developing economies. That matters for community and regional banks, which often have limited data and staff.

Examples of how supervisors approach the topic:

  • United States: On October 16, 2025, the Federal Reserve, the FDIC and the OCC announced the withdrawal of the interagency Principles for Climate-Related Financial Risk Management for Large Financial Institutions, issued in October 2023. The agencies said existing safety and soundness standards already require effective risk management of all material financial risks. For U.S. banks, that means climate disclosure is driven mainly by investor expectations, state law, securities rules where applicable, and the requirements of foreign jurisdictions in which the bank operates.
  • South Africa: The Prudential Authority issued 2025 guidance on climate disclosures for banks.
  • Canada: OSFI monitors climate reporting by federally regulated financial institutions through standardized templates, as described in its 2025 publication.

Because a U.S. bank with international subsidiaries may still face foreign requirements, a single global reporting core mapped to IFRS S2, with local add-ons, is usually the more efficient design than separate reports for each market. Check the current rules of each regulator that supervises your entities, since requirements and timelines change.

Where bank disclosures break down: data

The most common practical problem is not the narrative but the numbers. The Dutch AFM, in its report on transparent reporting of climate transition plans and financed emissions, found that banks struggle to obtain reliable primary data from financed companies, particularly deeper in the value chain. Institutions lean heavily on estimates, models and external data providers because primary data is limited. Scope 3 emissions of counterparties are the weakest area.

Supervisors see the same pattern in early cycles. OSFI's review of early climate reporting identified recurring problems such as incomplete fields, inaccurate data and non-compliance with standardized templates. It expects firms to move over time from proxy estimates toward more reliable, counterparty-specific data.

These are the issues that show up most often in practice:

  1. Counterparty data gaps. Small and mid-sized borrowers rarely publish emissions. Banks need a structured way to collect data at onboarding and renewal.
  2. Inconsistent boundaries. Different teams count different products, such as loans, bonds, project finance and facilitated emissions, without a documented scope.
  3. Template and field errors. Manual compilation from several systems creates avoidable mistakes.
  4. Unclear methodology. Readers cannot tell which figures are measured, which are modeled and which are proxies.

A practical response is to publish the data quality alongside the number. Many institutions use the PCAF five-tier data quality score, where Score 1 is the highest quality (directly reported and verified) and Score 5 the lowest, as the AFM report describes. A bank that discloses a Score 4 average with a plan to improve it is more credible than one that reports a precise figure with no explanation.

Teams that need the measurement fundamentals can build them through our Certificate in Carbon Accounting, which covers the GHG accounting basis on which financed emissions rest.

How to make bank climate disclosures credible

Credibility comes from process. The FSB's 2024 progress report points to robust internal governance, integration of climate data into internal audit reviews, and reconciliations between climate metrics and financial reporting data. It also notes that many jurisdictions are moving toward third-party verification. The FSB's earlier work on supervisory and regulatory approaches adds that supervisory oversight of climate-data governance, processes and controls, together with internal audit reviews, could strengthen data reliability, and that third-party verification could help avoid greenwashing.

A workable control framework has six parts:

  1. Named ownership for each metric, with a documented methodology.
  2. Data lineage from source system to published figure.
  3. Reconciliation of exposures to the general ledger, so the denominator of every intensity metric ties to the financial statements.
  4. Data quality scoring disclosed with the metric.
  5. Internal audit coverage in the annual plan, with testing of key controls.
  6. External assurance, starting with limited assurance on selected metrics and building from there.

Some banks already publish the basis of their numbers. Emirates NBD, for example, has implemented data validation, reconciliation with financial systems and transparent reporting of data sources and quality scores, described in its financed emissions basis of reporting accompanying a limited assurance report.

Control documentation and evidence trails are the same disciplines financial institutions already apply in other regulated areas, and resources on compliance documentation for financial services show how that discipline looks in practice. The climate data set needs the same treatment as any other figure that goes into a regulated report.

What a strong bank climate report looks like

Use this checklist when you review a draft, or when you read a peer's report.

  • Clear scope: which entities, products and asset classes are included and which are excluded, and why.
  • Standard references: the report says which framework it follows (IFRS S2, TCFD or a local rule) and identifies any deviations.
  • Financed emissions with method: the calculation approach, base year, data quality scores and share of the portfolio covered.
  • Targets with a pathway: sector targets, the scenario used, and what the bank will do if a client does not transition.
  • Governance in plain terms: named committees, frequency of meetings and how climate factors into incentives.
  • Assurance statement: the level of assurance, the metrics covered and the standard used.
  • Year-on-year comparability: restated figures flagged and explained.

On the last point, do not hide restatements. Better data will move your numbers, and readers accept that when it is explained.

Our perspective

We train the people who write, review and assure these reports, and one pattern holds across banks of every size: disclosure quality follows capability, not budget. A bank with a risk officer who understands IFRS S2, a finance team that can reconcile financed emissions to the ledger and an internal auditor who knows where the controls are weak will produce a report that stands up. A bank without them will produce a long report that does not.

That is why we map our certifications to the standards banks actually face: ISSB, ESRS, GRI and ISSA 5000. Our credentials are designed to be earned against real pass thresholds, not awarded for attendance, and they progress from foundation to professional level so that a team can build depth in stages. For climate risk, assurance, sustainable finance and carbon accounting, the skills line up with the four pillars a bank discloses.

Our advice is to treat climate disclosure as a finance-grade process from the start. Assign ownership, document methods, score data quality and plan for assurance before a regulator or an investor asks. Teams that do this early spend less time later on corrections and more time on the decisions the disclosures are supposed to inform.

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Build the skills your disclosure team needs

Strong disclosures depend on a handful of skills spread across risk, finance, audit and sustainability teams. Our programs are built around them, and each certification is a one-off fee per participant:

For a team that needs several short modules, the All-Access CPD Pass is $599 per year. Individual CPD courses include Mastering IFRS S1 & S2 Sustainability Reporting ($129), Carbon Accounting and GHG Measurement ($129) and Sustainability Assurance under ISAE 3000 ($129).

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Browse the full range on our certification catalog and pick the pathway that fits your role. For more background on reporting standards, read the ESG Insights magazine.

FAQ

Are bank climate disclosures mandatory in the United States?

There is no climate-specific federal supervisory guidance for banks at present. The Federal Reserve, FDIC and OCC withdrew their interagency climate principles for large financial institutions in October 2025. Banks may still face disclosure duties through other laws, securities filings and the rules of foreign jurisdictions where they operate, so confirm your obligations with counsel.

What is the difference between TCFD and IFRS S2 for a bank?

Both use the governance, strategy, risk management, and metrics and targets structure. IFRS S2 builds on the TCFD recommendations and is more specific, for example on Scope 1, 2 and 3 emissions and on targets. Banks already reporting under TCFD usually need to extend and tighten their disclosures, not rebuild them.

What are financed emissions?

Financed emissions are the greenhouse gas emissions linked to a bank's loans, investments and other financing. They fall under Scope 3 and are usually the largest part of a bank's footprint. Banks often estimate them with proxy data and score the data quality, for example with the PCAF scale.

Do bank climate disclosures need assurance?

Requirements depend on the jurisdiction, but several have taken steps toward assurance requirements, according to the FSB. Even where assurance is not required, banks use internal audit review and limited assurance from an external provider to strengthen reliability and reduce greenwashing risk.

Who should be involved in preparing a bank's climate disclosure?

Risk, finance, sustainability, internal audit and the board or its committee should all have a defined role. Risk owns the climate risk assessment, finance owns reconciliation and reporting, and internal audit tests the controls. Sustainability coordinates the narrative and targets.

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